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Statics and Dynamics
Economic models deal with stock and flow variables. These variables can be in one of the two states - equilibrium or disequilibrium - at a particular point in time. If the variables are in the equilibrium state and tend to repeat themselves from one time period to another, we have the case of "stationary equilibrium". If the variables are in a state of disequilibrium, in all likelihood they would have different values in the next time period.Models which do not consider explicitly the behavior of variables from one time period to another are called 'Static' models. In static models, the variables do not have time dimension. Because these models do not consider the passage of time, they cannot explain the process of change. Static models indicate the values of variables for a given time period but cannot indicate what their values will be in the next period. At the most they can only indicate the direction of change. In contrast, dynamic models consider explicitly the movement of variables over different time periods. What happens in one time period is related to what happened in the preceding time periods and what is expected to happen in the succeeding periods. In other words, variables in dynamic models are said to be 'dated'. These models indicate the movement of variables from one disequilibrium position to another, until the variables ultimately reach the equilibrium position.
Let the real interest rate, i r , equal 5 percent and the rate of depreciation, d, equal 10 percent. In this case, if the price of a piece of capital is P K = $10,000, what is th
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A particle at position I with velocity i has acceleration w given by i = w x ( w x i ) where ? is a constant vector. Show by using the vector triple product and calcula
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Explain how changes in the quality of healthcare will influence the demand for care.
Which of the following investments has a larger future value: Investment A an $1,000 investment earning 5% per year for 6 years? Or Investment B a %500 investment earning 10% per y
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When a country abandons its national currency and adopts the currency of the United States, this is known as: A) A floating exchange rate system. B) Dollarization. C) A speculat
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briefly explain any five uses of national income statistics
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